Category Archives: Life Insurance

When should you not buy Life Insurance?

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Many a times, what we do not do is more important than what we do. Similarly, understanding something which is not, can give insights into what that something actually is. This thought process can be applied to life insurance which is the most misunderstood concept in the personal finance world and bought for all the wrong reasons. So, instead of writing on the usual life insurance topics of why to buy, how much to buy and when to buy, I thought of penning down about when not to buy life insurance. I am hoping if you really understand when is it unnecessary to buy life insurance, you will be able to comprehend its genuine need. If you do not own a car, you do not need auto insurance. Similarly, in certain situations, life insurance is not required or some people may outlive the need for insurance in their lifetime.

Does your child really need Life Insurance?

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The basic purpose of life insurance is to secure the financial future of dependant members in a family. Dependant members here mean minor children, old parents, non-working spouse, etc. In the event of any unfortunate incident, life insurance proceeds of the deceased can be used to support day-to-day expenses, repayment of outstanding debts and funding children’s education goals, etc. However, somehow I cannot fathom why a child requires life insurance. Unless he/she is a child artist earning big time and are supporting parents in young age.

How much commission do insurance agents earn?

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Have you ever pondered what commission an insurance agent earns on the policy sold to you? Many are not even aware that the agent indirectly earns his commission income out of the premium paid by the customer to the insurance company. Since his commission is directly linked to sales, the agent would try to sell the product more which earns him the highest income.

My interaction with a personal banker….

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While I had heard many stories of rampant misselling of financial products, I was not really aware of the brazenness with which it was done. Until, one fine afternoon, I had a conversation with a personal banker.

The High Cost of Financial Mistakes:

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“I have decided to discontinue my life insurance policy”, said my good friend. He bought an endowment plan from a life insurance company five years ago for a sum of Rs.8 lakh and was paying an annual premium of about Rs.43,700.

Cheap premium should not be the sole reason to choose an online term insurance plan

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With the increasing internet density in India, it has become possible to buy financial products online. This ranges from equity shares, mutual funds and now life insurance. This article deals with online term insurance plans.

Keep your insurance and investment goals separate :

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We do a lot of due-diligence before shopping for an expensive item. We check out various shops to explore options and bargain for a value buy. Unfortunately, we do not take much effort in buying our financial products.

How much life insurance cover is sufficient for you?

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leftDoes your life insurance agent/advisor ask this very basic question before offering insurance cover?Sadly, the answer is no in 98 per cent of the cases. Agents just get down to the business of selling products which earn them high commissions. More on that in my next article. Here, the basic point is that without getting a holistic perspective on your financial profile, an insurance product is sold to you. The end result might be you pay huge premiums and still remain underinsured.